December 2017

The End of Poverty?

Jonathan Cornford

Christianity versus Capitalism (Part 3.2)

A note to readers:

GK Chesterton once quipped that, ‘If a thing is worth doing, it is worth doing badly’. This current series on capitalism is perhaps a case in point. I am writing this series because it concerns one of the most powerful narratives of our time - one which I am convinced is false. However, unpacking and countering that narrative requires telling a very big story. I am painfully aware that telling it in this format requires dealing briefly with some very complex questions and some readers will find this unsatisfying. Other readers, on the other hand, will find these articles too long and tedious. I am sympathetic to both these complaints. Nevertheless, I am proceeding on the view that we need to re-construct some sort of counter-narrative and, although this series is not in any way sufficient for such a task, let it at least be a pointer to the fact that the resources for such a counter-narrative are indeed available.

Blind text

According to the UN, in the last decade-and-a-half we have seen ‘the most successful anti-poverty movement in history’, with the proportion of humanity suffering from extreme poverty falling from 36% to 14%. According to some economists in Oxford, extreme poverty has collapsed from around 85% of the world population in 1820 to just under 10% in 2017 and that is in spite of a seven-fold increase in world population over that time. Deidre McCloskey calls this global explosion in living standards ‘The Great Fact’ and a writer for The Australian (Gary Johns) recently argued that this ‘Great Fact’ has brought more benefits to colonised peoples than any perceived losses suffered through colonisation. Addressing his remarks directly to Aboriginal Australians, he writes: ‘How about we call it quits and you be grateful that the Great Fact came to your land?’.

Versions of this story - the ‘Great Fact’ of modern history - have been repeated so often that it has simply become common knowledge, akin to the fact that we now know the world is round. The numbers seem to speak for themselves and are deployed as a moral bludgeon. The implication is clear: if you care about alleviating the suffering of the poor, then we need to support whatever has led to the successes of the last 200 years and especially what has led to the successes of the last fifteen years.

Graphs such as this one from the World Bank seem to present a fairly uncomplicated view of what has been happening to poverty world-wide. But is it really that straightforward?

Many commentators are quick to point out that the dramatic decline in extreme poverty over the last fifteen years has all happened within the context of the spread and deepening of global capitalism. Whether or not you like the system, it gets things done. If we really care about the poor, then we should be prepared to swallow our moral aversions and get on board with the one system that actually makes all people better off.

The story of how extreme poverty has been disappearing with the spread of global capitalism is perhaps the single most powerful moral justification for accepting the current economic order. As I noted in the previous edition, there have been a number of concerned and critical theologians who have ultimately felt compelled to endorse capitalism, despite deep reservations about its many negative effects.

The problem is, once you begin to dig a little deeper, the seemingly straightforward story about recent poverty trends is not what it seems. Indeed, the basis for the numbers that have been proclaimed with such solidity and confidence is more than a little tenuous and there is reason to question whether they have any meaning at all. Not only have these massive numbers been used to deflect our worries about the current economic order, they have in effect blinded us to the realities of human poverty that are right in front of our eyes. But before unpacking this controversial claim, it is worth briefly recapping what has been said about capitalism so far.

The story so far

The overarching theme of this series is that Christianity and capitalism are inimical: we cannot be faithful to both. But for such a statement to be meaningful there are a lot of questions that must be answered and obstacles that must be cleared away. What is capitalism and where does it come from? What has been the effect of capitalism in the world? What does any of this have to do with the way of Jesus?

In the first article (Oct 2016), I set out to define capitalism, arguing that it is not merely the form of economic behaviour that simply comes naturally to people, but is in fact a very particular form of economic organisation - an economic system - that emerged in Europe in the sixteenth century and spread to cover the globe by the twentieth century. At the heart of this system is the drive towards endless accumulation and the relentless commodification of all things. In the second article (Apr 2017), I examined the contention that capitalism was a product of Christianity - the Protestant Reformation in particular. I concluded that the ‘causes’ of capitalism were political and economic, not religious; however, there was indeed a connection between the rise of capitalism and religious change: capitalism thrived in a climate of a general waning of Christian faith in Europe and rising religious individualism within Christianity.

In the previous article (Aug 2017), I began to challenge the standard story about capitalism and rising standards of living. I argued that, even within Europe, the social changes of the first 400 years of capitalism were far more traumatic for a great mass of people than is generally acknowledged. Basic living standards for a great many went backwards, not forwards, and it is not until 1850 that there were broad-based and consistent improvements for Europe’s working classes. When the story is expanded to include the experience of peoples in the regions to which capitalism spread - the decimation of First Nations peoples in the Americas and Australasia; the tragic legacy of guns and slavery in Africa; the famines in colonial India; the collapse of China’s prosperity and social stability by the end of the nineteenth century - the moral equation becomes far more troubling than the standard story conveys.

But that is all in the past now. It might be argued that the problem was not capitalism, but imperialism, or racism, or class privilege, or lack of democracy, or something like that. Hasn’t modern global capitalism, characterised now by trade instead of war, and underpinned by liberal democracies and a rules-based international order, ultimately brought prosperity to all the world? It is that story that we will interrogate here.

‘The most successful anti-poverty movement in history’

Let me first present an outline of the standard story about global poverty as it is usually told. With the exception of a handful of East Asian ‘miracle economies’, the progress of ‘development’ in most of what was known as ‘the Third World’ was pretty underwhelming for most of the twentieth century. By the late 1980s, poverty in much of the world seemed intractable and many had given up hope. In the 1990s, the international development community, led by the World Bank, changed tack and, instead of trying to fix broken nations, it encouraged them to open their economies and let the magic of the international market do its work.

By the early years of the new millennium it began to look like the numbers were turning around and, by 2015, the target year of the Millennium Development Goals (MDGs), the UN could proclaim that progress towards the first MDG - ‘To eradicate extreme poverty and hunger’ - had been hugely successful. In that year, the UN proclaimed that more than one billion people had been ‘lifted out of poverty’ since 1990 and that the proportion of people in extreme poverty worldwide - that is, living on less than $1.25 a day - had fallen from 36% in 1990 to 12% in 2015: ‘The most successful anti-poverty movement in history’. What is more, according to the World Bank, not only had poverty fallen dramatically, but inequality was also falling dramatically and the key reason for this was that middle-income countries - China, India, Brazil - were taking a much larger share of global GDP.

The numbers are amazing and, in themselves, hold a peculiar force of persuasion. We live in a world that is characterised and measured by numbers and much of the power of scientific and technological development over the last couple of centuries has stemmed from the ability to reduce problems to mathematics. So we have been schooled into a basic trust in numbers that we grant to few other things. When those numbers come from large, sophisticated and reputable bodies such as the UN and World Bank, they have fuller force.

The problem with these particular numbers is the one that many children would ask immediately, but few adults ever think to: how did they count all the poor people? Here an adult would laugh and explain that, of course, no one actually counted the poor people, the number has been statistically deduced. Ah, there’s the rub. I don’t want to sound down on statistics - it is an immensely useful and powerful tool; however, for all its nerdy bean-counter image, statistics in the social sciences is really an art form in interpreting reality and as such is subject to a surprising amount of subjectivity and philosophical presuppositions.

There is one body that has a worldwide monopoly on the global poverty head count and that is the World Bank. There is no single data set or methodology by which global poverty can be measured, but rather a whole mish-mash of different forms of data from different countries and regions, covering differing time periods, measuring different things, using different methodologies, that must somehow be brought together to produce a single number. There are also massive holes in the data that must somehow be papered over. To do that requires immensely complex models that have to be built on layers of assumptions, guesses and methodological choices. And all that within an organisation that is highly politically contested and renowned as an ideological vanguard for a particular form of economic theory. All that is to say, the statistics that come out of the World Bank are anything but uncomplicated, ideology-free, value-neutral numbers.

Lords of Poverty: the World Bank, based in Washington, DC, is the monopoly provider of worldwide poverty data.

In 2001, the World Bank declared that the number of people living on less than $1 a day had risen by 20 million between 1987 and 1998. At this time, the World Bank came under a fierce attack by a US Congressional committee that denounced the lack of success in fighting poverty and threatened to cut off funds to the World Bank. Less than two years later, without any reference to its prior statement, the World Bank declared that the number of people living on less than $1 a day had actually fallen by 200 million. In that time, it had received no new data; all that had changed was the model.

The global poverty measurement essentially tries to count the number of people who are above and below a line that the World Bank sets. The reality is that a large proportion of the world’s population is clumped together somewhere close to this line, so moving it up or down just a fraction has a massive impact on the final number you get. And there are a series of reasons to be dubious about the methodologies the World Bank employs to get that number. For example, the central tool for comparing standards of living between countries - Purchasing Power Parity (PPP) - is currently based on a basket of goods that has very little relevance to poor people’s lives (things such as the cost of a massage!). The household surveys that are also central to the methodology for many countries are notoriously susceptible to manipulation – India found that it could lift 175 million people out of poverty (a 50% reduction!) simply by reducing the reporting period from 30 days to seven days. Indeed, what has happened in China and India is central to the whole story (as they have such a massive influence on the global figures) and the statistics for these two countries are particularly rubbery. The problems go much deeper than this, but I will not bore you with the detail. Nor can I here get into the problems in measuring global inequality, except to say that the complexity, not only of measuring inequality but also of defining it, gets even worse. The key take-home message about the global poverty head count is: don’t believe the hype.

Reconsidering poverty: a view from the Mekong

While the World Bank was proclaiming a global poverty success story, the Asian Development Bank was proclaiming a similar success story in reducing poverty in the Mekong region. In 2007, it declared that between 1990 and 2003 the number of people living on less than a dollar at day had fallen from 52% to 28% in Laos and from 46% to 33% in Cambodia, all driven by rapid economic growth (averaging between 6-8% per year). From 1995 up until that time, I had been researching and monitoring changes that had been affecting rural communities in those two countries. I was astounded at the boldness and crudity with which the Asian Development Bank (ADB) was proclaiming such a success - every detailed study of actual communities that I had come across and everything I had seen with my own eyes told a rather different story.

There was no doubting there had been very rapid economic growth over this period, but it had come primarily through plundering natural resources: logging, mining, damming rivers and land grabbing for agri-business plantations. The resources that were underpinning this ballooning ‘national wealth’ were the same resources that rural communities depended upon for their way of life. When you took the trouble to go beyond the ADB’s aggregated national statistics to find out what was actually happening to the rural people who constituted 80% of the population, the story was a lot more disturbing. Over this time, there were a raft of detailed, high-quality local studies that again and again told a similar story: life was becoming harder and more tenuous for very many rural communities. The findings of these studies are brought together in an Oxfam report I wrote at the time (Hidden Costs: The underside of economic transformation in the Greater Mekong Subregion) that is still available on the Manna Gum website.

What became clear is that the primary thing the ADB’s numbers demonstrated was not a story about poverty, but a story about the penetration of the monetary economy into rural life. While the cash economy was by no means a new thing to Lao and Cambodian farmers, it had until that stage only represented one part of their overall livelihood. A 2003 IUCN study found that in Sekong Province in Southern Laos, while average yearly ‘incomes’ were only around $120 (well below $1 per day), the value of all the goods that a household gathered from the forest were worth, if purchased at the market, over $525 per year. Such forest goods do not appear on the poverty measurement radar. This study showed that if average incomes in Sekong trebled, thereby technically ‘lifting them out of poverty’, but they lost access to the forests, then they would have suffered an overall decline in their standard of living. And that is precisely what was happening at the time.

Bon Kiet is member of the Phnong ethnic minority group in north-eastern Cambodia. She spends 2-3 days each week foraging in the forest. Bamboo shoots, such as this one harvested from the forest, play a more important role in her diet than rice. When I spoke with Bon Kiet in 2009 she described how she had lost access to large swathes of forest in the previous few years due to the operations of agri-business plantations. Although by official data Bon Kiet has always been poor, by her own consideration she had 'plenty' ten years previously and life had been 'easy'. In 2009 life was a daily struggle. Photo by Glenn Daniels.

Let me quote from perhaps the best studies of poverty in Laos, the Participatory Poverty Assessment of 2000 and 2006, the same period as the ADB’s supposed ‘success story’:

[Compared to the year 2000] villages that were revisited in 2006 were found generally to be either about the same or worse off ... the survey shows that poor villagers increasingly experience difficulty in providing food for their families. Natural resources were said to be seriously depleted in almost all locations ...

All this brings to a head a question that should be at the beginning of any discussion on poverty but rarely is: what do we mean by poverty? I have written about this at greater length before and do not propose to go into detail here (see especially Manna Matters, Nov 2009 and Nov 2011). Suffice to say, if the concept of poverty is to be a morally meaningful concept rather than just a crude economic measure, then it must somehow take into account experiences of quality of life, or wellbeing, and here we are on slippery territory. Such a concern must take into account a whole raft of life experiences and circumstances that go well beyond monetary income. The idea that we might compare the life situation of a Lao farmer to a Bangladeshi garment worker, to a Chinese e-waste processor, to a livestock herder in Southern Sudan, all with a single numerical measurement, is preposterous. For all of these, the complex conditions (both positive and negative) determining their quality of life are fundamentally a matter of context and that requires enumerating the details of each such context. Once we begin to ask some serious questions about just what is being measured, the World Bank’s poverty numbers don’t just look rubbery, they start to look meaningless.

A more complex story

So much debate these days takes place in polarised and crude forms. Many people (beyond the Manna Matters readership, that is) will assume that if I am arguing the World Bank’s poverty numbers can’t be trusted, then I must be arguing that poverty is getting worse. Well, not exactly. What I am saying is that making meaningful statements about increases or decreases in people’s quality of life requires taking a whole lot of factors into account and being clear about what exactly we mean by ‘quality of life’. I am not saying we can’t find indicators that help us measure such things, but that it is much harder than generally acknowledged and fiendishly difficult to do in a way that permits comparisons between contexts. (The UN’s Human Development Indicators are better at this, but even these have some pretty big shortcomings.) Moreover, this becomes even more complex once we start to make claims about what is causing improvements or deteriorations in people’s quality of life.

There is little doubt that the base material conditions of human life - our ability to produce food, to prevent and cure sickness, to supplement our lives with useful tools and materials - have improved incredibly over the last 200 years. In 1836, the world’s wealthiest man, Nathan Rothschild, died of an infection that today can be cured by antibiotics that cost a few dollars. But do we attribute all improvements of science and technology to capitalism? The great leap forward in human health came through the theory of the germ and improved sanitation - both of which were developments that happened well before research and development became the subject of capitalist investment. Indeed, there are many historians who trace the causes of the Scientific Revolution not to capitalism, but to the advances of monastic scholarship in Mediaeval Christendom. Moreover, while the base material conditions of life are surely very important to wellbeing, to what extent must they be understood within a broader context, such as one’s relative station in society, the conditions of work, the quality of relations between people and the physical environment in which we live?

So has global poverty increased or decreased over the last 15 years? We must be agnostic - we simply do not have the means to answer such a massive and complex question. If we are interested in what is happening in the lives of the poor around the world, then we need to pay attention to the details of what is happening in specific places. That will involve some recourse to statistics, but it requires much more. It requires understanding contexts.

For the purposes of this series, the question we are really skirting around is: have the conditions of life for humanity improved under capitalism or not? And when asking this question from a Christian perspective we must immediately acknowledge that this is a very multi-faceted question.

The proponents of capitalism respond unambiguously with a resounding, ‘Yes!’. I am not so sure. Certainly, the base material conditions of life have improved dramatically over this time. However, the supposed ‘Great Fact’ of the improvement in modern living standards is not quite as straightforward or as factual as it seems and those elements that are true cannot all simply be credited to capitalism. Moreover, the benefits of the so-called ‘Great Fact’ are spread incredibly unevenly and are by no means universal. On the other hand, there is little doubt in my mind that wherever capitalism has come to dominate that bonds of community have been undermined, people have become more isolated from one another and the earth has suffered. And far, far too many people have suffered unconscionably as casualties of capitalism’s advancement. While capitalism’s capacity to produce wealth is undeniable, its contribution to human wellbeing is much more problematic.

So far, we have only considered the standard social and material aspects of this question. But the clash between capitalism and the gospel goes much deeper. The heart of the question is what makes for life – ‘the life that really is life’ (1 Tim 6:19)? It is to this question we shall turn in the next edition.